Buy TM Toyota via selling Jun 65 puts
Long TM
/edit: oops should be Jul 65 puts
Monday, June 29, 2009
Saturday, June 27, 2009
VIX says sell, 50/200 cross says buy
Old school technical analysts use the 50 day moving average/200 day moving average crossover as a timing tool. The 50 day represents the short term trend, the 200 day the long term. When the 50 day crosses over the 200 day that is a buy signal. Here is a two-year chart on SPY (link).
Over at the VIX and More blog, Bill Luby writes about a VIX sell signal (link2). VIX is a sentiment indicator. Luby does a lot of work refining and backtesting on what actually generates good trading signals, because the raw VIX numbers typically do not.
No positions
Over at the VIX and More blog, Bill Luby writes about a VIX sell signal (link2). VIX is a sentiment indicator. Luby does a lot of work refining and backtesting on what actually generates good trading signals, because the raw VIX numbers typically do not.
No positions
Thursday, June 25, 2009
Surprise, surprise, surprise
Today is at least the third recent up day that surprises me. BBBY, NKE are some of the movers on earnings. I decide to take another dose of patience and wait for a better day.
No trading positions
No trading positions
Wednesday, June 24, 2009
Stuck in mud, BA 787, SDS
I missed today's rally, could not pull the trigger fast enough on selling SPY puts, and then SPY climbed too high for me to want to chase it.
Boeing BA lower after a downgrade and yesterday's news about another delay in the new 787 Dreamliner plane's test flight. BA gets very interesting to me at 40, with the idea to sell the Aug 30 puts (30 is the recent low).
Random Roger has an interesting blog entry about his thinking behind possibly increasing his hedge position in SDS (link). SDS is a double short SP500 exchange traded fund.
No positions
Boeing BA lower after a downgrade and yesterday's news about another delay in the new 787 Dreamliner plane's test flight. BA gets very interesting to me at 40, with the idea to sell the Aug 30 puts (30 is the recent low).
Random Roger has an interesting blog entry about his thinking behind possibly increasing his hedge position in SDS (link). SDS is a double short SP500 exchange traded fund.
No positions
Tuesday, June 23, 2009
Pick six, top newsletter picks
Many, many moons ago, there was a time I would read the Dick Davis Digest newsletter. Davis would subscribe to most of the popular stock newsletters and then summarize his conclusions in his digest. Davis would look for stocks that were selected in multiple newsletters. Back in the day, those popular stocks tended to outperform.
It isn't Davis, it is Hulbert in this recent column (link). Hulbert highlights six stocks popular in the top performing newsletters. The list:
ABB JNJ MMM TAP SYMC WMT
As always, this isn't advice, or a recommendation to buy or sell. This blog focuses on my short term real money trades, and the thinking behind them. I make forays into the long term, but tend to only write about the long term in general terms, instead of posting every transaction.
As for the stock market, I didn't get the gap down that I was looking for, and the market ended up near unchanged for the day. Calendar seasonality tends towards more downside for the rest of this week. Friday or Monday may be a better entry point on the long side.
No positions
It isn't Davis, it is Hulbert in this recent column (link). Hulbert highlights six stocks popular in the top performing newsletters. The list:
ABB JNJ MMM TAP SYMC WMT
As always, this isn't advice, or a recommendation to buy or sell. This blog focuses on my short term real money trades, and the thinking behind them. I make forays into the long term, but tend to only write about the long term in general terms, instead of posting every transaction.
As for the stock market, I didn't get the gap down that I was looking for, and the market ended up near unchanged for the day. Calendar seasonality tends towards more downside for the rest of this week. Friday or Monday may be a better entry point on the long side.
No positions
Monday, June 22, 2009
Rain falling? Will it last?
Like a summer thunderstorm, the rain drenches the stock market bulls, with a hard down day that closes at the lows for the day. If there is a significant gap down on tomorrow's open, it is worth a look on the long side. Better yet might be the three down days in a row, that total about 5%.
Support for SPY at 87.5, then 82.5, then 80 and 75. Like I've been writing, I think SPY 75 will contain any downside for the remainder of the calendar year.
No positions
Support for SPY at 87.5, then 82.5, then 80 and 75. Like I've been writing, I think SPY 75 will contain any downside for the remainder of the calendar year.
No positions
Saturday, June 20, 2009
1-1 for June option cycle
For the June option cycle I have one win SPY, and one loss MON. It nets out to break even before commissions, actual loss is cost of the commissions. For 2009, I am ever so slightly in the green, less than 1%.
Thursday, June 18, 2009
Bare cupboard-declining option premiums
Option premiums have declined so it has been made for bare cupboard for put writers like me that are looking for low risk sells. The low premiums have me thinking about changing tactics.
A few movers today include Smuckers SJM with good earnings. Option premiums were too low for me to take action. Research in Motion RIMM flopped on their earnings. Carnival Cruises CCL popped up on decent earnings, beating their much lowered expectations due to swine flu.
Long SPY expiring tomorrow
A few movers today include Smuckers SJM with good earnings. Option premiums were too low for me to take action. Research in Motion RIMM flopped on their earnings. Carnival Cruises CCL popped up on decent earnings, beating their much lowered expectations due to swine flu.
Long SPY expiring tomorrow
Tuesday, June 16, 2009
Double dip? Three scoops?
The stock market has two significant down days, and I'm looking for a third. The market gets a lot more interesting on the long side, if it we get a third significant down day. Maybe it will be a full boat banana split and a 10% or more pullback. After this 40% rally off the lows, a pullback would be natural. At this point, a 33% or 50% or 66% pullback retracement would be healthier for the long term health of the stock market, than more rally.
SPY 88 is minor support. There is still lots of anecdotal reports about folks waiting for a pullback to get in, so any selling is likely to be contained.
Long SPY (expiring Friday)
SPY 88 is minor support. There is still lots of anecdotal reports about folks waiting for a pullback to get in, so any selling is likely to be contained.
Long SPY (expiring Friday)
Monday, June 15, 2009
Stop loss orders
On the PCGS forum there is some discussion on stop loss orders, and the like in this thread (link).
On this down day in the stock market it is a timely topic. Limiting losses is vital for traders, not so much for long term investors. I've touched on the subject of stop loss orders before in this February 23, 2009 entry (link2). It is uncanny that a good many investors buying in on 2/23/09 using stop losses would have been stopped out near the bottom and likely have missed most of the 40% rally off the lows.
Again, for long term value investors, stop losses are a poor strategy. The reason for buying is because of mispricing, a perceived bargain. A bargain that gets cheaper is even a better buy, time to load more. The reason to sell, isn't a lower price, it is a change in the fundamental story, or an acknowledgment that initial analysis of a bargain was wrong.
For long term value investors, diversification, asset allocation, gradualism are better long term strategies for success than tight stops. For traders, stops are essential, as is right sizing of positions and risk management.
As for traders, while no one goes into a trade to lose, it is predictable that certain types of traders will tend to lose. One group of predictable losers are novices that trade without a plan to cut their losses, novices that trade too big a size for their bankroll, that let emotion in to cloud their thinking. These folks are extremely likely to suffer big losses and lose their entire account. It is predictable.
Long SPY (expiring this Friday)
On this down day in the stock market it is a timely topic. Limiting losses is vital for traders, not so much for long term investors. I've touched on the subject of stop loss orders before in this February 23, 2009 entry (link2). It is uncanny that a good many investors buying in on 2/23/09 using stop losses would have been stopped out near the bottom and likely have missed most of the 40% rally off the lows.
Again, for long term value investors, stop losses are a poor strategy. The reason for buying is because of mispricing, a perceived bargain. A bargain that gets cheaper is even a better buy, time to load more. The reason to sell, isn't a lower price, it is a change in the fundamental story, or an acknowledgment that initial analysis of a bargain was wrong.
For long term value investors, diversification, asset allocation, gradualism are better long term strategies for success than tight stops. For traders, stops are essential, as is right sizing of positions and risk management.
As for traders, while no one goes into a trade to lose, it is predictable that certain types of traders will tend to lose. One group of predictable losers are novices that trade without a plan to cut their losses, novices that trade too big a size for their bankroll, that let emotion in to cloud their thinking. These folks are extremely likely to suffer big losses and lose their entire account. It is predictable.
Long SPY (expiring this Friday)
Friday, June 12, 2009
Bulls get frustrated and "play your game"
I've been writing about how frustrating the stock market has been for would be bears, with every recent dip met with buying. Thursday's early rally then sell off has a similar effect on would be bulls.
Natural Gas UNG, gold GLD, treasuries TLT all have more interesting action than the stock market. What I remind myself is that when I stray into those areas, I tend to have a much lower batting average.
I've been watching the NBA finals (basketball). Orlando coach Stan Van Gundy had some deceptively simple, yet profound bit of advice for one of his players, Rafer Alston: "play your game." Van Gundy was half kidding, half serious, yet it is sound advice for traders and investors. Those that are channel traders tend not to do well trading momentum breakouts. Those that focus on stocks and earnings (like me), tend not to do well trading commodities and bonds.
Sometimes I write that markets are the same all over, more alike than different. There is a lot of truth in that, but there are differences as well. Sometimes missing those detail differences is what causes trading losses.
Long SPY
Natural Gas UNG, gold GLD, treasuries TLT all have more interesting action than the stock market. What I remind myself is that when I stray into those areas, I tend to have a much lower batting average.
I've been watching the NBA finals (basketball). Orlando coach Stan Van Gundy had some deceptively simple, yet profound bit of advice for one of his players, Rafer Alston: "play your game." Van Gundy was half kidding, half serious, yet it is sound advice for traders and investors. Those that are channel traders tend not to do well trading momentum breakouts. Those that focus on stocks and earnings (like me), tend not to do well trading commodities and bonds.
Sometimes I write that markets are the same all over, more alike than different. There is a lot of truth in that, but there are differences as well. Sometimes missing those detail differences is what causes trading losses.
Long SPY
Tuesday, June 09, 2009
A case for gradualism
Blogger Roger Nusbaum writes about gradualism in his June 9, 2009 entry (link):
>>
...if they [money managers or market timers] responded to the last meltdown by selling at precisely the wrong time why would they somehow handle the next meltdown differently?
...
The easy way to avoid this dilemma is to just avoid big bets. Selling everything is an enormous bet and is difficult to get right. ...
This dilemma is a big reason of why my approach is so gradualist. If you are going to participate in the stock market then you need to realize that occasionally the market will go down and thinking you can avoid any drawdown is unrealistic. All of my method around the 200 DMA is focused on going down less when the market looks like it will go down a lot. In that context selling everything is simply the wrong trade.
>>
For long termers, I am a big fan of gradualism. Strategies such as dollar-cost averaging, asset allocation, making small moves instead of big bold moves, are all part and parcel of that. Long term timing mechanisms such as the 200 day moving average, Dow Theory, Value Line appreciation projections are some tools that some use for long term timing.
Many folks, especially those relatively new to the market prefer big bold bets, or at least reading about them. In my experience, not many of those bold folks stick around, if they remain bold. Some of them are only bold on paper and don't put up any real money. Some of them are hindsight traders that only post after they have winners and don't write about their many losers.
As for the recent stock market action, today is about as dull as dull can be. It looks to me like "the calm before the calm." The market cliche "never short a dull market," comes to mind. The decline in volatility means slim pickings for those like me that like to sell options. Best to wait until a fatter pitch comes down the pike instead of swinging and missing at what is being thrown at the moment. There is almost always another opportunity, a better opportunity, usually soon.
Monday's late rally again slammed the door in the faces of those looking for a sharp pullback. That doesn't mean it can't or won't happen, but there has been a lot of money flowing in on every small dip.
Long SPY
>>
...if they [money managers or market timers] responded to the last meltdown by selling at precisely the wrong time why would they somehow handle the next meltdown differently?
...
The easy way to avoid this dilemma is to just avoid big bets. Selling everything is an enormous bet and is difficult to get right. ...
This dilemma is a big reason of why my approach is so gradualist. If you are going to participate in the stock market then you need to realize that occasionally the market will go down and thinking you can avoid any drawdown is unrealistic. All of my method around the 200 DMA is focused on going down less when the market looks like it will go down a lot. In that context selling everything is simply the wrong trade.
>>
For long termers, I am a big fan of gradualism. Strategies such as dollar-cost averaging, asset allocation, making small moves instead of big bold moves, are all part and parcel of that. Long term timing mechanisms such as the 200 day moving average, Dow Theory, Value Line appreciation projections are some tools that some use for long term timing.
Many folks, especially those relatively new to the market prefer big bold bets, or at least reading about them. In my experience, not many of those bold folks stick around, if they remain bold. Some of them are only bold on paper and don't put up any real money. Some of them are hindsight traders that only post after they have winners and don't write about their many losers.
As for the recent stock market action, today is about as dull as dull can be. It looks to me like "the calm before the calm." The market cliche "never short a dull market," comes to mind. The decline in volatility means slim pickings for those like me that like to sell options. Best to wait until a fatter pitch comes down the pike instead of swinging and missing at what is being thrown at the moment. There is almost always another opportunity, a better opportunity, usually soon.
Monday's late rally again slammed the door in the faces of those looking for a sharp pullback. That doesn't mean it can't or won't happen, but there has been a lot of money flowing in on every small dip.
Long SPY
Saturday, June 06, 2009
Barrons: UNG and GLD
Friday, June 05, 2009
Risk taking and happiness
Only tangentially on topic, but interesting to me, I found an article about risk taking and happiness, and a book on the subject at this link.
William Gurstelle writes:
>>
... here's the cool thing. I found that moderate, rational, risk takers, that is, those with scores between the mean and one standard deviation to the right are the people who are most satisfied with their lives. I call that area "the golden third" because it's roughly 1/3 of the population. Studies (and there are several) show that people who take just a bit more risks than average, that is, those who live their lives in the golden third, tend to do better than average. They tend to be more satisfied with their lives and more fulfilled. To me, that's a stunning conclusion.
>>
In stock market terms, it isn't easy to quantify where a person fits on the risk scale. Some mutual fund companies use a test to determine risk tolerance so they know what kind of investments might be most suitable for each individual. However, it is one thing to answer a test question under calm rational conditions with no money at stake, and another thing, to make decisions in real time under fluid conditions, when the decisions have consequences.
It reminds me of a true story about a would-be trader that signed up for an expensive advanced option course. During the many weeks of paper trading practice, the person did fine, winning much more often than losing. I don't know if the paper trading quotes were rigged so as to make winning easier or what, but when he started trading with real money, he managed a stunning eight losers in a row, and lost his entire stake in a few weeks.
William Gurstelle writes:
>>
... here's the cool thing. I found that moderate, rational, risk takers, that is, those with scores between the mean and one standard deviation to the right are the people who are most satisfied with their lives. I call that area "the golden third" because it's roughly 1/3 of the population. Studies (and there are several) show that people who take just a bit more risks than average, that is, those who live their lives in the golden third, tend to do better than average. They tend to be more satisfied with their lives and more fulfilled. To me, that's a stunning conclusion.
>>
In stock market terms, it isn't easy to quantify where a person fits on the risk scale. Some mutual fund companies use a test to determine risk tolerance so they know what kind of investments might be most suitable for each individual. However, it is one thing to answer a test question under calm rational conditions with no money at stake, and another thing, to make decisions in real time under fluid conditions, when the decisions have consequences.
It reminds me of a true story about a would-be trader that signed up for an expensive advanced option course. During the many weeks of paper trading practice, the person did fine, winning much more often than losing. I don't know if the paper trading quotes were rigged so as to make winning easier or what, but when he started trading with real money, he managed a stunning eight losers in a row, and lost his entire stake in a few weeks.
Thursday, June 04, 2009
Bears see their shadow
Bears see their shadow and go back to the cave. It has been lean times for most bears with some of the popular bear stocks such as CMG, GMCR moving up. Lean times for stock market chickens such as myself as well, but better that than the beating that many bears have been experiencing.
The stock market still seems to want to go up, treasuries still want to go down. A few retailers get hit on weak same store sales. Some like COST, recover by the end of the day.
Long SPY
The stock market still seems to want to go up, treasuries still want to go down. A few retailers get hit on weak same store sales. Some like COST, recover by the end of the day.
Long SPY
Wednesday, June 03, 2009
The sun will come out ...
I was tempted to link the song "Tomorrow," with the tag line:
the sun will come out tomorrow / bet your bottom dollar that tomorrow there will be sun
A late rally cuts the stock market losses in half, so it might read: the sun has come out today.
It is difficult so sound an all clear after the three month rally we have seen. Still, it seems like buyers show up whenever there is a selling squall. That can continue, until complacency sets in, or a big external news event shakes things up, and then the rug can be pulled out. At this point, I am thinking that SPY 75 will contain any corrections for 2009 and would look for more longs on any minor dips.
Gold and other commodities have a correction day. Seems like normal action.
Long SPY
the sun will come out tomorrow / bet your bottom dollar that tomorrow there will be sun
A late rally cuts the stock market losses in half, so it might read: the sun has come out today.
It is difficult so sound an all clear after the three month rally we have seen. Still, it seems like buyers show up whenever there is a selling squall. That can continue, until complacency sets in, or a big external news event shakes things up, and then the rug can be pulled out. At this point, I am thinking that SPY 75 will contain any corrections for 2009 and would look for more longs on any minor dips.
Gold and other commodities have a correction day. Seems like normal action.
Long SPY
Monday, June 01, 2009
What the ?
What the ? The stock market accelerates to the upside after a push above the 200 DMA on Friday. I did not expect this move and for the most part I am not participating. If someone had outlined this strong rally scenario last Thursday, I would have said maybe 5% chance.
I am tempted to chase the rally, then remind myself that is where some of my big losers have come from. It is a high risk time to go long, especially via selling puts like I tend to do.
My secure thought is that at least I am not short and losing my shirt. There are few things worse than being short and losing big money when most traders are raking it in.
Long SPY
I am tempted to chase the rally, then remind myself that is where some of my big losers have come from. It is a high risk time to go long, especially via selling puts like I tend to do.
My secure thought is that at least I am not short and losing my shirt. There are few things worse than being short and losing big money when most traders are raking it in.
Long SPY
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